Appellate Division, Third Department
Payment of Taxes — Deficiency
St. Denis v. Blakesley
Appealed from Supreme Court, Clinton County
Background: In 2003, the plaintiff sold property in the Town of Plattsburgh, Clinton County, to defendant Cole D. Blakesley, over which Blakesley executed a mortgage in favor of the plaintiff. Blakesley subsequently conveyed the property to defendant Arthur Blakesley, who conveyed the property to defendant Robert Paul Flick Jr. While both of the deeds included a clause assuming the mortgage, neither deed was signed by the grantee. In 2006 Flick, by defendant Richard Giroux acting pursuant to a power of attorney, conveyed the property to the defendant. The deed stated the conveyance was subject to the mortgage held by the plaintiff and contained a clause by which the defendant was to assume the mortgage. The deed was not executed and acknowledged by the defendant pursuant to the requirements of General Obligations Law §5-705. A foreclosure action followed when mortgage payments were not made.
The supreme court granted the plaintiff’s motion for summary judgment against the defendant on his foreclosure action. The defendant was the successful bidder at the foreclosure sale, held June 2008, and paid a deposit on the sale price. Ultimately he failed to complete the transaction. The supreme court later declared the defendant to be in default and directed the referee to schedule an additional sale and pay from the defendant’s deposit, real property taxes over and above those determined to be owed in the May 2008 judgment of foreclosure and sale.
The plaintiff now contends the supreme court erred in requiring the outstanding property and school taxes to be paid out of the proceeds of the sale. The plaintiff argues the defendant should be required to pay those taxes since they were incurred while he was the title owner of the property and because the judgment of foreclosure is unclear concerning whether tax liens existing at the time of the sale were to be paid from the sale’s proceeds or whether the property was to be sold subject to the tax liens.
Ruling: RPAPL 1354(2) provides that “the officer conducting the [foreclosure] sale shall pay out of the proceeds all taxes, assessments, and water rates which are liens upon the property sold.” The statute was amended in 1997 by deleting “unless the judgment otherwise directs,” thereby eliminating the option that the property could be sold subject to any tax liens. The taxes were liens on the property at the time of the auction sale and were properly payable. The plaintiff was not entitled to a deficiency judgment since the defendant neither assumed the mortgage nor the debt secured by the mortgage, therefore he cannot be liable for any deficiency. The orders are affirmed but for the payment of the 2008 school tax out of the proceeds as it is not established whether that became a lien after or before the auction sale.
Livingston L. Hatch for the appellant, and Evan F. Bracy of Niles, Piller & Bracy PLLC for the respondent